Debt Consolidation
Reduce your monthly payment
and eliminate your debt today.
It’s easier than you think.
Debt Consolidation
Reduce your monthly payment
and eliminate your debt today.
It’s easier than you think.
Contact Your Creditors
Nine out of ten creditors will negotiate new repayment schedules with consumers who are having trouble paying their bills. Don't wait until you receive collection calls or dunning letters to contact your creditors. Once you've decided how much you can pay, and how long it will take you to get back to your regular payment schedule, pick up the phone and contact your creditors. If you are scared to call them, ask someone to sit with you while you dial the phone. It's easy to procrastinate on this, but the longer you wait, the less obliging the creditor is likely to be.
Call the creditor, briefly and calmly explain the situation, and propose your modified payment plan. For instance, you may offer to pay 75 percent of your normal payment for four months, and then resume paying the entire amount. Make sure you keep a note of who you talked with, the date and time, and what was agreed upon.
Don't expect your request to be accommodated graciously. But if a customer-service representative is really uncooperative or nasty, calmly ask to speak to someone who can help you. If the conversation gets too heated or upsetting, tell them you'll call back later, hang up, and call again after you've had a chance to calm down, this time asking for a supervisor.
Some lenders may try to pressure you into paying more than you can really afford, but don't give in. It doesn't do them—or you—any good to make agreements you can't possibly live up to. It's also not a good idea to use your credit cards to pay another creditor, since you're really just rearranging the problem, not addressing it.
It is extremely important to send a letter restating your agreement to whomever you spoke. In fact, it is a good idea to send that letter via certified mail, return receipt requested, so you have proof it was received.
Having said all that, some creditors will not work out payments with consumers directly. Instead, they expect you to go through a nonprofit counseling agency. For some people, working through a counseling agency may be preferable anyway—unless your problem is truly short-term and you know it will be resolved soon.
Another warning: Some creditors will agree to accept lower payments, but then will consider you "late" because you didn't pay the full amount. As a result they may charge late fees, raise the interest rate, and/or report you as delinquent to the credit reporting agencies. You must insist, as part of your arrangement, that they not take any of those actions. Ideally, you want to make sure you have that in writing, or at least include that understanding in the confirmation letter you send them.
Live Up to Your Agreement
If a creditor has agreed to accept lower payments, make every effort to keep up with those new amounts. If you can't for some reason (you are laid off longer than expected, for example, or your illness is prolonged), call the lender at the first sign of trouble. No matter how torturous it may seem, it is really important to keep in touch with your creditors throughout this time.
Stop Spending
Cut your expenses to the bare bones and start carefully evaluating every single purchase you make. As obvious as this sounds, some people don't change their habits even when their personal finances hit rock bottom.
If you're really in a financial crisis, you have to make some tough choices about how you can best use your money. Stop eating out, resolve not to purchase any new clothes for several months, put vacation or home improvement plans on hold. You may even want to stop putting money into your savings account until the storm passes. Penny-pinching may be painful, but ultimately can prove to be rewarding. Gaining a sense of control over your paycheck can give you a sense of control over your financial crisis.
Keep Your Problem in Perspective
Millions of people go through financially difficult times every year. The debt collection business—a $40 billion-plus-a-year industry—is a testament to that fact. Like most crises, this too will pass. In the meantime, hang in there and be willing to do what you have to do to get back on track.
If you feel like you can’t handle this on your own, then its probably in your best interest to have a company with a strong background and reputation handle it for you. At Rubicad.com we’re committed to finding the best debt reduction solution for our clients.